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HHS Issues Draft Application, FAQs for Early Retiree Reinsurance Program

The U.S. Department of Health and Human Services (HHS) recently posted a draft application and frequently asked questions (FAQs) regarding the Early Retiree Reinsurance Program (the Program) on its Office of Consumer Information and Insurance Oversight (OCIIO) Web site (http://www.hhs.gov/ociio/regulations/index.html#early_retiree). As discussed in our May 13, 2010 alert (http://www.foley.com/publications/pub_detail.aspx?pubid=7107), the Program was established by the Patient Protection and Affordable Care Act and is intended to slow the decline in the number of employers providing health benefits to early retirees (i.e., retirees who are age 55 or older, but who are not yet eligible for Medicare). The Program sets aside $5 billion to reimburse participating plan sponsors for a portion of the costs incurred in providing health benefits to those early retirees and their eligible spouses, surviving spouses, and dependents.

The draft application requests detailed information about the plan sponsor and about the benefit plans under which reimbursement will be requested. In addition, the draft application requires a plan sponsor to describe the cost-saving programs and procedures implemented by the sponsor with respect to “chronic and high cost conditions” (conditions for which the sponsor expects to incur $15,000 or more in health benefit claims for one participant in one plan year), as well as the estimated amount of reimbursements the sponsor expects to receive under the Program. Finally, the draft application contains a “plan sponsor agreement” pursuant to which the plan sponsor agrees to abide by the Program’s various requirements.

According to the FAQs, the only anticipated change to the draft application is the addition of an address where plan sponsors can send the “official” Program application. HHS expects to release the official application later this June. HHS also intends to post further instructions about how and where to submit an official application, as well as when plan sponsors may submit their applications. The FAQs encourage plan sponsors to regularly monitor the OCIIO Web site for this information.

Although the FAQs as originally posted had suggested that applications for the Program would not be accepted on a first-come, first-served basis, HHS has since clarified that applications will be considered in the order in which they are received. However, HHS does not intend to accept only a pre-determined number of applications. In light of HHS’ clarification, and given that the funds for the Program are expected to run out well before the Program’s scheduled ending date of January 1, 2014, interested plan sponsors should apply to participate in the Program as soon as practicable.